Australian law firms are entering a new phase, one where profitability is no longer driven purely by winning more work, but by how efficiently that work is delivered. New global research, Profitability in Law, from LEAP Legal Software highlights a growing shift across the profession.
“Legal professionals today are navigating a period of significant transformation,” shared John Espley, LEAP’s Chief Executive Officer. “Pricing pressures, evolving client expectations and rapid technological advancement, particularly in artificial intelligence, are reshaping how firms operate and compete.”
But as adoption accelerates globally, Australia risks falling behind, creating a widening performance gap within the legal sector.
There is no shortage of optimism among Australian legal professionals. An overwhelming 92% believe their firms have moderate to high potential to improve profitability, with half saying that potential has increased over the past year. At the same time, profitability has become a central focus. Nearly two-thirds (65%) of firms now rank it as a high or top business priority—signalling a clear shift from growth-at-all-costs to a more disciplined focus on financial performance.
However, this ambition is being tested.
Pricing pressure, rising operational complexity and heavy administrative workloads are making it harder for firms to convert demand into sustainable margins. In fact, 66% of Australian respondents identified client pricing expectations as a key constraint on revenue growth, the highest of any region surveyed.
As Tina Shergold, Head of LEAP Australia and New Zealand, explains, the rules of the game are changing. “The Australian legal sector is entering a phase where profitability will depend less on how much work firms win and more on how efficiently that work is delivered. Firms remain confident about growth but pricing pressure and rising operational complexity mean productivity gains will increasingly determine how successfully firms convert demand into sustainable margins.”
Artificial intelligence is quickly becoming one of the most powerful levers for improving productivity in legal practice. Globally, 57% of firms report regular use of integrated AI tools and 71% say those tools are already delivering meaningful time savings. Australia, however, tells a different story.
Only 37% of Australian firms report regular AI use, and just half say they are seeing significant time savings from the technology. This gap suggests not just slower adoption but a growing divergence in how firms operate. Caution is understandable in a profession built on precision and trust. But delaying adoption may come at a cost.
Firms that effectively integrate AI into their workflows are already unlocking efficiencies in areas like document automation, legal research and administrative processes. Those that don’t risk being left behind, not because of a lack of demand, but because of how that demand is serviced.
Despite strong confidence in revenue potential, many Australian firms are facing structural barriers to growth. More than a third (37%) report difficulty delegating work or leveraging their teams effectively, pointing to deeper issues in workflow design and resource allocation.
This is compounded by:
The result? Capacity constraints that limit scalability, even when demand is strong.
In this environment, improving productivity isn’t just about working faster—it’s about rethinking how work flows through the firm.
Beyond productivity, workforce stability is emerging as a critical challenge. While 61% of firms are prioritising competitive salaries, retention pressures remain. Burnout and workload intensity continue to impact staff turnover and with it, knowledge continuity. One finding stands out: 33% of Australian firms have no documented processes in place when staff leave. In a profession built on expertise, that’s a significant risk.
Undocumented workflows don’t just create inefficiencies, they can undermine consistency, training and ultimately client service. Over time, they also erode a firm’s operational resilience. Capturing and sharing knowledge is no longer a “nice to have”—it’s becoming essential infrastructure.
Encouragingly, Australian firms are clear on where technology can make a difference. Automation of repetitive tasks, better document management and enhanced legal research tools are seen as the top opportunities to improve productivity. Together, these investments signal a shift toward operational efficiency as a core driver of financial performance.
However, there’s a catch.
Many firms are still working across fragmented systems, switching between multiple platforms throughout the day. This fragmentation can dilute the benefits of technology, slowing workflows, increasing training requirements and creating friction in day-to-day operations.
The challenge isn’t just adopting technology, it’s integrating it effectively.
“The Australian legal sector is in a strong position, with firms confident about their future growth,” concludes Tina Shergold. “The challenge now is how firms translate that confidence into more efficient ways of delivering legal work, particularly as pricing pressure and operational complexity continue to increase.”
The Profitability in Law report identifies that the firms that will succeed over the next decade will be those that:
The message from the research is clear: the future of profitability in law isn’t just about growth. It’s about how that growth is managed.
Dive into all the insights and download The Profitability in Law: Global Report 2026.
The Profitability in Law: Global Report 2026 draws on a quantitative survey of 700 legal professionals across Australia, New Zealand, the United States, Canada, the United Kingdom and Ireland. Fieldwork was conducted between 10-28 November 2025. Participants included firm leaders, partners, senior practitioners and operational decision-makers representing a range of firm sizes and practice areas. The study examined how firms are managing profitability across four core areas: strategy and revenue, people and retention, technology and operations, and AI adoption. Fieldwork was analysed in January 2026 to identify both global trends and market-level differences in how firms are responding to profitability pressures.
LEAP Legal Software is a cloud-based legal practice management platform supporting over 71,000 legal professionals worldwide. With more than 30 years of innovation, LEAP integrates matter management, legal accounting, document automation and AI-driven tools to help law firms operate more efficiently and profitably.
